Consumer Reports, among others, reported this week that the International Agency for Research on Cancer ("IARC"), which is part of the World Health Organization ("WHO"), has classified low-level radiation from cell phones as "possibly carcinogenic to humans" based on limited evidence linking cell phone use to glioma, a type of brain cancer. Although Consumer Reports concluded in its article that IARC's action was based on "limited evidence" and doesn't "convincingly" link typical cell phone use with cancer, an American public that often skims only headlines of articles, may be susceptible to appeals of sympathy by plaintiff lawyers representing long-time cell phone users with brain cancers. Throughout the 1980's the utility industry battled spurious claims, premised upon junk science, that electromagnetic field radiation was responsible for "cancer clusters" of child leukemias and other dreaded diseases. Although virtually every major EMF toxic tort claim was successfully defended by industry over a period of years, tens of millions of dollars was spent defending these lawsuits, which were brought in courts all across the country. As in the case of low dose radiation from cell phone use, there were millions of millions of potential plaintiffs in the EMF cases and all of the prospective utility industry defendants had deep pockets. Following issuance of the IARC release, a spokeswoman for the Federal Communications Commission ("FCC") stated that FCC currently requires that all cell phones meet safety standards based upon the advice of federal health and safety agencies. Moreover, according to the National Cancer Institute's Surveillance Epidemiology and End Results Program ("SEER"), the incidence of brain cancer in the United States has actually declined over recent years as cell phone use has skyrocketed. Despite these reassuring pronouncements, well-heeled plaintiff lawyers may bring some cases as trial balloons to test industry resolve based upon other equally ambiguous pronouncements, such as the contention that cell phone use can affect "brain function". As in the cases brought against chemical manufacturers in the 1980's, which alleged that chemicals cause generic "immune system dysfunction", enterprising plaintiffs may attribute any number of injuries to purported "brain function" impacts. Hopefully, courts will continue to exercise their gatekeeper roles to maintain some semblance of scientific rigor in the courtroom to exclude inconclusive science if these cases are brought.
On January 28, 2010, the Louisiana Court of Appeal, Fourth Circuit, affirmed the New Orleans trial court’s denial of class certification in a series of putative class actions involving alleged exposure to Normally Occurring Radioactive Material (“NORM”) on industrial property located in , Louisiana, which had been used for oilfield pipe and equipment cleaning operations for over forty years. Although class certification was rejected on multiple grounds, the decision relied in large part upon the Louisiana Supreme Court’s landmark decision in Ford v. Murphy Oil USA, Inc., 703 S.2d 542, which involved alleged exposures from hazardous materials from several distinct sources. As in Ford, the class action failed because the Harvey plaintiffs alleged toxic exposures as a result of pipe cleaning activity on the non-contiguous property of three separate and distinct landowners – Rathborne, Grefer and ITCO – over a forty-six year period, with varying amounts of pipe cleaning taking place at different times in different locations (in almost checkerboard pattern) by different companies. Ford stands for the proposition that only mass torts arising from a single common cause or disaster are appropriate for class certification.
How did pipe cleaning cause the alleged NORM exposure? Pipe cleaning involves the mechanical reaming of the inside of oilfield pipe to remove scale or crust that builds up on the interior of the tubing to the point where the scale impedes the flow of oil up the pipe. The scale, formed from natural elements, gradually clogs the pipes that are inserted deep into the ground during the course of petroleum production. At some point, it was determined that the scale inside the pipe contained material determined to be radioactive, with varying half-lives (time for half of the atoms of a radioactive substance to decay), which is called “NORM” or “TERM,” an acronym referring to Technologically Enhanced Radioactive Material. When precisely the oil industry knew or should have known that pipe cleaning could result in occupational exposure to NORM is hotly disputed. The plaintiffs allege that over the decades this pipe cleaning occurred in Harvey, “toxic dust” (NORM/TERM) was deposited in their neighborhoods and was the source of various diseases and illnesses.
What I find interesting about the Fourth Circuit’s opinion is its rejection of the trial court’s determination that the plaintiffs failed to satisfy the numerosity requirement of the Louisiana Class Action Statute, which was a primary basis for the trial court’s denial of class certification. The trial court found that there was not sufficient numerosity because so many potential class members had already opted out, citing other lawsuits in which 3,748 individuals, a large percentage of the putative class, were involved. These so-called opt-outs were represented by several outspoken plaintiff lawyers, who did not want to see a class certified. The Fourth Circuit ruled that it was premature to opt out of a class before it was certified. A plaintiff could not opt out of a class that did not yet exist. Therefore, the Fourth Circuit found that the numerosity requirement had been met. However, the Fourth Circuit held that sufficient commonality for class certification was not present. In addition, the Fourth Circuit held that the broad diversity of the diseases and ailments of the plaintiffs underscored the inadequacy of the class representatives representation, leading the court to conclude that there was no typicality. The Harvey TERM plaintiffs complained of diseases ranging from common cold symptoms to reproductive problems and many different forms of cancer. The plaintiffs' strategy at both the trial court and appellate level was to argue that the court should not be required to conduct a rigorous analysis of whether the facts satisfied the class action requirements. Plaintiffs argued that the trial court confused a motion to certify a class with a trial on the merits, essentially asserting that it had made too many "factual findings". However, the Fourth Circuit soundly rejected this argument, citing the Louisiana Supreme Court's decision inBrooks v. Union Pacific Railroad Co., 2008-2035, *6, 2009 WL 1425972 (La. 05/22/09), which recognized the "essentially factual basis of the certification inquiry and of the district court's inherent power to manage and control pending litigation." Brooks, 08-2035 at p. 11, 13 So 3d at 554
BNA Toxics Law Reporter reports that on August 3, 2009, the First Circuit affirmed the dismissal of the American Chemistry Council ("ACC"), formerly known as the Chemical Manufacturers Association, in a case arising from a plaintiff's long-term exposure to vinyl chloride. The First Circuit's decision in June Taylor et al v. ACC, et al is attached. The ACC is the chemical industry's trade association. The ACC has been effective in improving the image of the chemical industry in the United States and in promoting safety and environmental initiatives within its membership. The family of Claude Taylor alleged in federal district court in Massachusetts that ACC, along with several chemical manufacturers, should be found liable for failure to warn, conspiracy and fraud for helping to produce false and misleading warnings that were adopted by the PVC industry. The plaintiff focused on an ACC publication entitled, "Chemical Safety Data Sheet SD-56", which was first published in 1954 and later revised in 1972, claiming that the publication downplayed the danger of VC exposure. In upholding the trial court's dismissal of the claims against the ACC, the First Circuit held that there was no evidence that the trade association had the "unlawful intent" necessary to establish "substantial assistance liability" under MA law. The court held that it would have been necessary for plaintiff to prove that ACC was aware of Monsanto's tortious conduct and that it intended to assist or encourage that conduct. The wide dissemination of SD-56 within the industry was not sufficient to support the claim that the ACC was aware that Monsanto was incorporating SD-56 into its own literature. ACC's lawyer, Tim Couglin of Thompson Hine, successfully convinced the appeals court that: (1) ACC did not provide "substantial assistance" to Monsanto; (2) ACC had no knowledge of Monsanto's activities; and (3) there was no record evidence to support the underlying conspiracy claim.
Trade associations do not manufacture or market products, but they have been the targets of toxic tort and product liability plaintiffs nonetheless. The threshold issue in these cases is whether the association owed a duty of care to the plaintiff. In cases in which the trade association is alleged to have promulgated a safety standard, the issue often comes down to the degree of control the trade association has over its members. In the absence of control, the trade association is not as likely to be held liable for failure to warn. What about a trade association that endorses products? If a plaintiff's injury is due to a defect in a product bearing the "Good Housekeeping Seal of Approval", for example, is the association potentially liable? One California court replied in the affirmative if it could be demonstrated that the association obtained economic gain from the endorsement and encouraged the public to purchase the product, and that the plaintiff relied on the representation to his detriment. Courts appear to recognize that it is not in the public interest to hold trade associations liable for injuries to remote plaintiffs in tort litigation. The AAA might rank hotels on the basis of service and cleanliness. Should the AAA be subject to liability for injuries allegedly resulting from its failing to warn its members that a hotel was located in a bad neighborhood?
In his recent article, "Made in China: Consumer Product Lawsuits Imported to the United States", Seattle defense lawyer and IADC member Gregory Shelton offers American importers several good suggestions for avoiding potential liability from imported products. These include: (1) requiring the exporter to comply with all applicable U.S. product quality standards and product safety regulations; (2) obtaining legal counsel in the exporter's home jurisdiction; (3) requiring the exporter to obtain appropriate insurance coverage from an American or international insurer that will protect the importer in the event of a recall or lawsuit; and (4) retaining good legal counsel early. I would add to Greg's checklist: (5) having an independent U.S. consultant available to test, if necessary, the components of imported products, particularly if an American consumer reports a complaint to the company or to the CPSC. Early independent product evaluation can be critical for an importer in planning its next steps, such as whether to perform a recall or halt future shipments until an issue can be addressed. There are many good consultant firms to chose from. One excellent consultant up-to-speed on the new CPSC requirements is Exponent.
However, we disagree with Mr. Shelton when he argues that Chinese imports are more likely to result in lawsuits or recalls than imports from other countries. There is simply no empirical evidence to support this assertion. To the contrary, China has made enormous progress, particularly over the last year, to police its domestic suppliers. To blame China for the spate of recalls over the last couple of years is to ignore the past lack of adequate funding for the CPSC, the agency that provides regulatory oversight of consumer products. Moreover, blaming China results in Americans turning a blind eye to problems in our domestic product supply chain.
People living near manufacturing plants increasingly seek judicial solutions to environmental issues. In the wake of an environmental incident (such as a release of contaminants into the air or groundwater), fear and suspicion hinder constructive dialog and problem solving by manufacturers and their communities. Environmental issues, as much as any other corporate concern, tend to have a ripple effect, often causing repercussions with far-reaching impact on company business. An accidental release may result in adverse public relations, worker safety disputes, boycott of company products in the market place, adverse regulatory consequences and bad feeling in the community. How a company responds to media attention at the outset has an important effect on how the community, including elected officials, health authorities, regulatory agencies and prospective jurors, react to the issues presented. Accordingly, a company must plan in advance how it will respond to an environmental crisis and what steps it will take to minimize the fallout from such a crisis.
A Value Assurance Plan should be considered as one significant component of a corporate response to homeowner concerns over property values. A Value Assurance Plan, sometimes referred to as a "VAP", is a contractual promise to assure homeowners that the equity in their homes will be protected if they sell their homes and realize less than full value from the sale due to an environmental concern in the community. A VAP promises to compensate those homeowners who sell (or have sold) their homes by paying them the difference between the property's sale price and its fair market value prior to the discovery of possible contamination. As part of the arrangement, the company may also offer to reimburse the closing costs and the moving expenses of residents who leave the community. Often, the reassurance that a VAP provides is successful in preventing the panic selling (the rush to the door) that often strikes communities shortly after public disclosure of an environmental problem.
To implement a Value Assurance Plan, a company needs creative lawyering and a consultant who has a strong understanding of the economic dynamics driving the property diminution claims and who can accurately assess the potential exposure to the company of taking alternative courses of action, including taking no action at all. Two such high qualified consultants are Jerry Dent at Alvarez & Marsal in Birmingham, Alabama, and Dwight Duncan at EconLit in Phoenix, Arizona.